Canadian Underwriter

Tories pledge to work with industry to lower Ontario auto rates

August 15, 2018   by Greg Meckbach

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Ontario’s new finance minister is promising to work with industry to reduce auto insurance rates, but does not want the as-yet-unspecified plan to be a mere “photo opportunity.”

Rates have increased for three consecutive quarters, despite several measures over the past eight years to cut claims costs.

“We will continue to work with the industry and the regulators to do everything we can to lower insurance rates in a responsible manner,” Finance Minister Vic Fedeli said Monday during Question Period at Queen’s Park in Toronto.

But Fedeli did not answer the question that was actually put to Premier Doug Ford by Gurratan Singh, the New Democratic Party MPP for Brampton East. Singh asked Ford whether he plans to stop what Singh calls the “practice of postal code discrimination.” Ford referred the question to Fedeli, who criticized the NDP for a deal it struck in 2013 with then-Liberal Premier Kathleen Wynne.

In 2013 the Liberals, who then had a minority government, agreed to mandate a 15% reduction over two years of the average private passenger auto insurance rate. That reduction never happened. The Liberals made the promise in order to persuade the NDP to vote in favour of the 2013-14 budget instead of defeating the government. At the time, the NDP was claiming the insurance industry made $2 billion in “extra profits” in 2011 compared to 2010 (when the insurance industry collectively lost $1.7 billion on Ontario auto).

That deal to reduce rates 15% was “absolutely nothing more than a photo op,” Fedeli told the legislature this past Monday.

Charles Sousa, Liberal finance minister until this year’s election, made several changes aimed at reducing claims costs. For example, a new definition of catastrophic impairment took effect in 2016; it is now illegal for organizations such as health care providers to ask a claimant to sign an incomplete claim form; and an insurer can now ask a claimant for a statutory declaration on the circumstances giving rise to an accident benefits invoice.

Fedeli told MPPs on Aug. 13 that he will “work with industry and regulators” to “do everything we can to make a real difference in auto insurance rates, not another photo op.”

The Progressive Conservatives were elected to power this past June. In 2017, the PCs were promising to end the practice of territory-based ratings but this changed when Doug Ford was elected PC Party leader this past March. A spokesperson for Fedeli (then the PC finance critic) had noted in 2017 that motorists in Brampton, Vaughan and Mississauga pay the highest rates.

Insurers say the “factor of where that car resides has the biggest impact on their ability to forecast whether or not there will be claims and how much those claims will be for,” Joe Carnevale, associate broker and director of sales for Concord, Ont.-based Brokers Trust Insurance Group Inc., told Canadian Underwriter earlier. Carnevale is also director of Territory 10 for the Insurance Brokers Association of Ontario (IBAO).

In Brampton, motorists have “seen premiums increase at a rate that is nearly five times higher than the provincial average,” Singh said Aug. 13 during Question Period.

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2 Comments » for Tories pledge to work with industry to lower Ontario auto rates
  1. Mark De Sanctis says:

    Read the Superior Court decision of Kapoor v. Kuzmanovski, 2018 ONSC 4770. This issue was brought before the judiciary in Brampton.

  2. Marmiester says:

    Kapoor v. Kuzmanovski, 2018 ONSC 4770- What a complete waste of judicial resources. No mention of postal codes or even examining the postal code rating reasons. Agree a change is needed in the rating factors, which should be fair to the customers but this has no bearing on a civil trial for auto damages. I’m also surprised an injured plaintiff would agree to these “novel” delays in having their day in court so the real facts of the case can be argued…

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